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24 page analysis of the support service & specialty suppliers to the nurition industry.
The number of consulting and services firms attached to the nutrition industry grew by 155% between 1996-1999.
Commonly, in each of the support segments, small, specialized firms emerge first. Then, as the industry reaches critical mass, national companies see the opportunity for a niche business and create a separate industry-focused division. As an industry matures and competition intensifies, professional and support services can provide the competitive edge that differentiate the winners from the losers. Success stories and strategies of the following were just some of the companies focused upon: Covance, Industrial Labs, Genetic ID, IMAGINutrition, Great Smokies, Oxis, Pantox, Oasis, Integrated Marketing, Burson Marsteller, Koopman Ostbo, Gauger & Silva, IMP Group, R.P. Scherer, Banner Pharmacaps, Colorcon, Burrill & Co, etc....
Excerpt from this issue....
New Businesses Support Industry Growth
When assessing a growth industry, investors often look for opportunities not only within the industry itself but also on the periphery. The rationale is that companies which thrive in a support or supply role may be a better bet. They pose less risk because they stand to benefit notwithstanding the fluctuating fortunes of individual companies. But the nutrition industry has no dominant support company, technology segment or service provider like a Cisco Systems in the internet business, for instance.
So which support or supply businesses will benefit from the health of the nutrition industry? Some services are common to any growing industry—marketing, advertising, web services, PR, headhunting, banking, publishing, conferences, management consulting and legal or regulatory advice. Others are more specific to the nutrition industry—product testing, packaging design, licensing, labeling, clinical research and certification services.
These areas have all attracted specialists, and in many cases have grown even faster than the industry they serve. While the nutrition industry grew xx% from $xx.x billion in 1995 to $xx.x billion in 1998, the number of consulting and service firms attached to the industry grew by xxx%, based on comparative data from Whole Foods magazine. There are now xx equipment and packaging suppliers, according to the Vitamin Retailer 2000 Buyer’s Guide. Natural Foods Merchandizer lists xx advertising agencies, xx associations, xx publishers and xxx “service” companies in its annual Retailer Purchasing Guide.
Commonly, in each of the support segments, small, specialized firms emerge first. Then, as the industry reaches critical mass, national companies see the opportunity for a niche business and create a separate industry-focused division. This is illustrated clearly in consumer research services, where specialized companies, including HealthFocus, Natural Marketing Institute, The Hartman Group and others compete with national organizations including SRI International, Gallup and Roper Starch. (NBJ’s analysis of consumer research was bountiful enough to devote an upcoming issue to the subject.) Linda Gilbert, president of HealthFocus, noted regarding the entry of large consumer research houses, “We do it at such a level of detail that they’re never going to touch. We taking a focused, micro look.” However, she conceded that it’s important to look at the bigger conventional researchers, because it puts the industry in context relative to buying a car or a house. “You have to have perspective.”
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